Do I have to lose control of my assets to reduce my inheritance tax liability?

 In Inheritance & Estate Planning

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Do you want flexibility, access to and control of your assets whilst inheritance tax planning? We take a look at generational wealth planning

One of the downsides of some inheritance tax planning is that you lose access to and control of your capital. The ‘Lifestyle Trust’ is a new and flexible way to achieve a balance between access to your capital, inheritance tax planning and control over the distribution of your assets. It’s being called the ‘have your cake and eat it’ Trust.

Inheritance tax planning used to only be a concern for the very wealthy, but these days many more of us need to consider how to deal with it.

There are several ways you can plan your finances to help reduce your inheritance tax liabilities. Typically they involve removing the money from your “estate” (the total value of your assets) at least seven years before you die. One way to help mitigate inheritance tax is to put an investment into a trust.

A trust allows you to entrust your assets to your appointed “trustees”. The trustees then become the legal owners of the trust fund and it is their responsibility to control, manage and ultimately distribute the trust fund to the “beneficiaries”.

Any growth in value of the investment that you place in the trust is immediately outside your estate for inheritance tax purposes and, if you survive for seven years after setting it up, the value of the original investment will not be liable for inheritance tax.

The Lifestyle Trust
The obvious concern with this arrangement is that you could be losing direct access to the wealth you have put into the trust. Ideally you would like to maintain access to some of the money for an overseas holiday perhaps or to help fund your grandchildren’s education. Old Mutual Wealth have recently launched the “Lifestyle Trust” which has been designed to provide a solution to this problem.

Although other trust arrangements will allow you access with regular payments, it is the level of flexibility that makes the Lifestyle Trust unique. You can access a pre-agreed proportion of the trust fund for your own future use in what are known as entitlements as and when you might need it. You can even defer or waive payment of an entitlement if you decide you don’t need the money when it becomes available.

The Lifestyle Trust could be right for you if you want to leave your wealth tax efficiently to future generations whilst at the same time retaining the flexibility to periodically have access to some of the money for your own needs and projects. That’s why it’s being called the ‘have your cake and eat it’ trust.

Find out more about how we can help you protect your wealth, in your lifetime and for future generations.

The value of investments and the income they produce call fall as well as rise. You may get back less that you invested.

Trusts and Estate Planning is not regulated by the Financial Conduct Authority.

Tax treatment varies according to individual circumstances and is subject to change.

What’s your next step?

We offer all prospective clients an initial discovery meeting with one of our financial planners at our expense, to see if we can be of help to you.

Book your meeting today, if you want to leave your wealth tax efficiently to future generations whilst at the same time periodically having access to some of it.

The information contained within the blogs was correct at time of writing. If this area is of interest to you then do please feel free to get in touch as we would be more than happy to bring you fully up to date on any changes.

Shaun Brennan
Shaun has been looking after clients for 26 years and in that time has helped many families and business owners plan for their future and achieve their goals. Shaun was the pioneer of our inaugural ‘Joined-Up-Expertise’ event for business owners and is looking forward to developing the concept further.